ELECTROLUX: MERGER EXPERTS
Electrolux is a multinational company, which has reached its current size by an aggressive horizontal expansion strategy. Although experts in mergers, this case show the difficult process of uniting two with vastly different managing cultures and style. The core problem facing Electrolux, is how to integrate and motivate the group of 150 renegade middle managers who are hindering the success of their merger.
At the core of Electrolux's evolution is an aggressive strategy of expansion through acquisition. In the beginning, mainly acquisitions of Nordic firms were established to strengthen their position of leader of household appliances in its traditional market. Eventually, they engaged in deals of acquisitions in Europe to broaden its presence, coupled by a desire to develop products for new markets.
Part of Electrolux's ideology of merging was that they never chose a company; they only waited for the right opportunity to appear.
However, there was a basis for each merger to be pursued: a) generally buying competitors in its core business, and selling of idle assets; b) acquiring new business for future growth; c) to pay less that the total asset of the company.
Several characteristics of Electrolux include a commitment to decentralised organisation, with a small corporate headquarters. Furthermore, HQ role in the company was limited to dealing with strategic issues such as investment programs and product range decisions. All operational matters are centralised to the subsidiaries. Structural organisation is relatively flat; quoting Scharp: "Ã¢ÂÂ¦we have at least two hierarchical levels fewer than other companies of the same size
With more than 200 acquisitions in 40 countries in their record, Electrolux amassed a fairly robust experience with international mergers. In such fashion, they tried to treat each opportunity individually and as a unique case. Zanussi...